Every time a person who owns real estate dies in Michigan, one of three things can happen to that real estate:
- It is held jointly with others and title automatically passes to other owners of the property.
- It is part of the probate estate and passes from there to a beneficiary or heir.
- It is part of the probate estate and is sold to raise money to pay estate debts.
To understand these options, it is necessary to get an overview of estate law and the probate process in Michigan.
What Is Probate in Michigan?
If friends and relatives of a deceased individual were allowed to deal informally with the estate assets, it is very likely there would be controversy. At the very least, creditors might not be paid, and potential beneficiaries might be in conflict. That is why Michigan, like other states, requires that the estates of residents who die pass through a court-supervised process called probate.
Probate is a legal proceeding that governs the issues and controversies about how a decedent's estate should pass in Michigan. A personal representative is appointed to manage the proceeding.
Although there are several types of probate, ranging from a summary procedure for small estates to supervised formal procedure for contested estates, all require that the court be given notice of the steps taken, and some require that every step be authorized by the court.
Does All Real Property Pass Through Probate?
When a person dies in Michigan, most of their cash, bank accounts, retirement accounts and real and personal property become part of the estate's probate property unless they are trust assets. Probate property includes all assets that become part of the estate in probate. All assets, including real property, that the deceased owned by themselves rather than held jointly with someone else are probate property.
Assets that a deceased person owned jointly with one or more individuals may not be probate property. This is the case with real property. If the deceased was the sole owner of the real property, it must pass through probate in order to be transferred to someone else. If they held title to a property with one or more persons that includes the right of survivorship, the property passes directly to the other surviving joint tenants upon one owner's death.
Joint Tenancy With Right of Survivorship
What kinds of ownership allow the right of survivorship? In Michigan, only joint tenancy title deeds can include the right of survivorship. If this is the case, as soon as one of the owners dies, their interest in the property passes in equal shares to all other surviving owners. To determine whether a Michigan deed includes the right of survivorship, look in the deed for the words "joint tenants with full rights of survivorship,” JTWROS, or similar language.
These right-of-survivorship deeds are used in estate planning to preserve ownership within a specific group of individuals. They are used frequently between married couples, but can also be used between multiple co-owners who agree on the equitable distribution of deceased tenants’ ownership interests of non-probate assets.
So if a parcel of real estate that a deceased owned is held in joint tenancy with the right of survivorship, there is no need to worry about removing their name from the deed. All that is necessary to prove clear title in the remaining owners is the death certificate.
What Happens in Michigan Probate Proceedings
If real estate is not held in joint tenancy with the right of survivorship in Michigan, it must pass through probate in order for a deceased owner's interest to be transferred. That means that it is important to understand what a probate is and how it works.
Each Michigan probate is different, dealing with different size estates with different issues involved. However, the procedure can involve any of a variety of steps taken by the personal representative. Some are similar in all probates. The steps range from looking for a will to paying taxes to distributing the estate assets to beneficiaries and/or heirs.
The probate process can involve any of these issues:
- Determining whether the deceased drew up a will.
- Locating a will if the deceased made one.
- Finding the persons who witnessed the will.
- Court hearing and ruling on any will challenges.
- Adjudicating the validity of a will.
- Determining who the heirs are if no valid will is found.
- Appointing someone to serve as the personal representative for the estate.
- Identifying and finding estate probate assets.
- Transferring the probate assets to the personal representative or the administrator.
- Calculating the value of the probate property to see if any shortcut procedures apply.
- Compiling a complete list of probate debts.
- Determining whether claimed debts are legitimate.
- Locating beneficiaries of a will, or determining and locating heirs of the deceased.
- Converting assets like real estate to cash, if necessary, to pay estate debts.
- Managing any ongoing businesses of the estate during probate.
- Completing estate tax forms and paying any taxes due.
- Distributing property to beneficiaries or heirs.
Dying Testate vs. Intestate
Who inherits real property if it is part of the probate estate? That depends on whether the decedent left a valid will. In Michigan, a will is valid if made by a person over the age of 18 and signed by that person in the presence of two adult witnesses who also sign the will. It can also be valid as a holographic will if it is handwritten by the person making the will and signed by them.
The issue of whether an estate must be probated in Michigan is not impacted by the existence of a will or by the lack of one. In either case, the cash, property and other assets held by the deceased at the time of death must pass through a legal process in order to transfer property to living beneficiaries and/or heirs. That process is probate.
But who will inherit real property from the probate estate does depend on whether or not there was a valid will. Early probate duties of the personal representative include locating the will and determining if it is valid.
Dying Testate in Michigan
When a resident of Michigan dies leaving a valid will – testate – the estate laws of Michigan require that the instructions in the will be followed to the extent possible. For example, the court will almost always appoint the person who was named in a will as personal representative to that post. Obviously, if they are dead or refuse, that is not possible.
Likewise, during probate, it is the inheritance specifications set out in the will that control distribution of assets to the maximum extent possible. The persons or organizations named in a will are termed "beneficiaries," and those who inherit without a will are termed "heirs."
Transmitting Real Estate in Probate
If a will leaves everything to a spouse or to a close friend, the real estate generally passes to that person. If it is bequeathed to a nonprofit organization or to a child, the personal representative transfers the property to that person after the probate court approves the transfer.
Typically, this is accomplished by using a fiduciary deed signed by the personal representative. The only requirement for a fiduciary deed is that the personal representative states that they are signing in their capacity as the personal representative of the estate. This can be a quitclaim deed, a legal document that transfers property without any warranty, but it does not have to be.
However, if the real estate is the only asset, and the decedent left significant debts, the personal representative may have no choice but to sell the property to cover these obligations. In that case, any money remaining from the sale after debts are paid would pass to the beneficiary.
Dying Intestate in Michigan
If a decedent dies without making a will, they are said to have died intestate. An obvious result of this is that they left no binding instructions about who is to inherit their real property. But Michigan law includes a provision setting out which close relatives will inherit when a Michigan resident dies intestate. These are termed "heirs."
These laws generally set out the order in which next-of-kin will inherit by how close the relationship is. Michigan puts the surviving spouse and the deceased's children and descendants on the top of the heir list. Grandchildren are considered descendants, but only inherit in their parent's place if the parent died before the decedent.
Family Member Priorities for Inheritances
If there is no surviving spouse, the decedent’s children or the children of any deceased children inherit everything. But if the decedent left neither a surviving spouse nor descendants, the inheritance moves down the list, in this order:
- Decedent's parents.
- Decedent's siblings.
- Decedent's nieces and nephews.
- Decedent's grandparents.
- Decedent's aunts, uncles and cousins.
The next in line to inherit cannot inherit if anyone higher on the list is still living.
Who Gets What as Intestate Heirs?
The question of which relative inherits the real property from an intestate estate depends on what relatives are still alive when the decedent dies. Sometimes relatives share the inheritance:
- Only surviving spouse: In Michigan, if a decedent leaves only a surviving spouse, they are the sole heir and inherit everything.
- Surviving spouse but no living parents or descendants: Spouse inherits everything.
- Surviving spouse and descendants: A surviving spouse receives $150,000 and half the balance of the estate if the spouse and the decedent had any children together; the children receive the other half of the estate. But if the decedent had children in another relationship, the spouse inherits only the first $100,000 and half the remainder of the estate, and the rest is shared equally by all surviving children.
- Surviving spouse but no descendants: If a decedent leaves a spouse and at least one parent but no descendants, the spouse takes the first $150,000 of the estate, then 75 percent of the rest. The parent or parents take the remaining 25 percent.
- Decedent leaves no living relatives: When someone dies without any living relatives and no valid will, the estate goes to the state.
Once it is determined which heirs will inherit the real property, the personal representative must get the court's permission to transfer title. When the court gives approval, the personal representative signs a fiduciary deed. There is no need to remove the name of the decedent from the deed. When the heir takes the deed to be recorded, the recorder will issue a new deed in the heir's name.
Teo Spengler earned a J.D. from U.C. Berkeley's Boalt Hall. As an Assistant Attorney General in Juneau, she practiced before the Alaska Supreme Court and the U.S. Supreme Court before opening a plaintiff's personal injury practice in San Francisco. She holds both an M.A. and an M.F.A in creative writing and enjoys writing legal blogs and articles. Her work has appeared in numerous online publications including USA Today, Legal Zoom, eHow Business, Livestrong, SF Gate, Go Banking Rates, Arizona Central, Houston Chronicle, Navy Federal Credit Union, Pearson, Quicken.com, TurboTax.com, and numerous attorney websites. Spengler splits her time between the French Basque Country and Northern California.